New Carolin Gold Corp. (“New Carolin”) is a Canadian junior-stage exploration and mine development company engaged in the evaluation and development of a 144 square kilometers of contiguous claims, known as the Ladner Gold Project. These properties are located in Southwestern British Columbia, Canada, and the project is highway accessible in approximately two hours from Vancouver.
 
To advance the project, New Carolin Gold Corp. has assembled a management and advisory team with expertise in exploration, development, and operations. This team functions with integrity to create a performance-driven culture for stakeholders with competent corporate governance as well as being dedicated to safety and proper environmental and community stewardship.
 
Actually I am quite familiar with this property, having recommended Carolin Mines Ltd. in the February 12, 1982, issue of my newsletter. With the gold mania of the late 1970s still alive in the minds of investors, thanks to gold rising from $35 to $850, Carolin Mines shares had, toward the end of 1981, risen to the lofty level of around US$60. In fact, Carolin was one of the only new gold mines put into production at that time, and the market was extremely hungry for new stories. The company had one profitable quarter, but a combination of poor gold recoveries combined with a plummeting gold price caused the mine to close in 1984.
 
During 1994-96, Athabasca Gold carried out $3.5 million in additional underground exploration and metallurgical work and intended to put the mine into production, but sub-$300 gold rendered the project uneconomic though exploration and metallurgical work was highly successful.

More recently, Century Mining acquired the project, but due to aggressive acquisition and overexpansion and inability to service debt, it has been in bankruptcy. Thanks to efforts of Bob Thast, the current president and CEO of the company, New Carolin Gold Corp. was formed to acquire this highly prospective but greatly underexplored tract of land into this corporate shell.
 
Here are the reasons I am recommending purchase of the shares of New Carolin Gold Corp. (“Carolin”) at this time:
 
 • Low share price (<C$0.05) means market has totally discounted the company’s value.
 • New Carolin Gold Corp. now owns 100% of the southern portion of the entire project and 40% of the northern portion of the target. The remaining 60% of the target is held by Century Mining, which is now in receivership. It is my belief that the chances of acquiring the remaining 60% from the receiver are very high. Once fully acquired, the Carolin Mine Project will include the following:

 
o NI 43-101 inferred gold resource of 607,000 ounces;
o A deposit that is open along strike and at depth;
o Newly discovered McMaster high-grade surface gold surface discovery with starter pit identified;
o Tailings deposit permitted for mining that contains in excess of 23,000 oz. can be used to fund 100% acquisition of the entire Carolin Mine Project and potentially provide early exploration and development funding, thus negating significant shareholder dilution;
o Historical data includes 595 holes drilled, 40,000 meters;
o Existing mining permit in good standing;

o Existing underground mine in good condition with 10.2 kilometers of underground workings;
o 30% of the mill complex still standing;
o Management owns approximately 30%;
o Excellent infrastructure, 2-hour drive from Vancouver;
 
• Discussions are underway with two interested purchasers of tailings resource, which would enable the company to fund purchase of the remaining 60% of the Carolin Mine Project, and fund significant exploration.
• Massive near-term and longer-term exploration potential. Upon completing the acquisition, New Carolin will hold the entire 144 square kilometer property, which includes 27.5 kilometers of the Coquihalla Gold Belt. The area marked “Priority Target” is the area of immediate focus of the company. Longer term, this entire Coquihalla Gold Belt is believed to have multimillion-ounce potential.
 
Within the Priority Target area, several gold mineralized structures have been identified as shown in the illustration on your left, which is a view of the cross sections of the Carolin Mine looking east. The reddish areas are where gold mineralization has been outlined. The brown areas within the zones are likely zones of expansion waiting to be drilled.
 
Actually, the $3.5 million worth of work carried out by Athabasca Gold from 1994 to 1996 has provided considerable value for New Carolin. That work, which was intended to allow Athabasca to re-start production at the Carolin Mine, was comprised of the following:

 
• 110 meters of new drift to extend the workings on the 875 level;
• 1,630 meters of underground drilling in 19 holes;
• 7,101 meters of underground diamond drilling in 92 diamond holes;
• 564 meters of surface drilling in 6 holes;
• 50 meters of trenching and 280 meters of tunneling;
• A very detailed metallurgical report that suggests gold recoveries in the high 90% range, contrasted with recoveries of around 50% by Carolin Mines in the early 1980s.
 
New Carolin has the data from the entire Athabasca work program, which revealed the following:

 
• Mineralization continued to the north;
• Discovery of a new type of higher-grade mineralization west of old workings and alongside the Hozameen faults;
• Expansion of the McMaster Zone, open in all directions;
• Successful metallurgy not only from underground workings, but high recoveries from the tailings pond, which is blessed with the reciprocal of low recoveries from operations in the early 1980s;
• Modified mining techniques to maintain acceptable dilution rates, which was another problem that afflicted the operation of the early 1980s.
Note from the illustration above, the pink areas are the areas of new mineralization established by Athabasca. The blue areas were the areas that were mined out previously. A total of 728,429 historical ounces were outlined by Athabasca. They intended to put the mine into production at a cost of $8.1 million in 1996, but a sub-$300 gold price at the time resulted in the project being shelved. Now New Carolin inherits that work, which would no doubt cost considerably more today than it cost 20 years ago.
 
Current Plans
 
• To monetize the 23,000+ ounces of gold in the tailings pond. It is my understanding that management is talking to two different parties, who have expressed interest in this resource. Management believes it can raise between $2 million and $3 million from a discounted sale of the tailings.
• An agreement is in place with the Receiver of Century Mining, whereby the Company will provide 17.5 million shares for the remaining 60% interest in the Ladner Gold Project. To strike the completion the Company must raise a further C$1.25M to develop the “Project.”
• Begin exploration and development work that will include infill drilling required to make the 728,429-ounce resource outlined by Athabasca into a NI 43-101 compliant resource and to begin expanding the open-pit resource at the McMaster Zone, where surface grades are quite high for an open-pit operation.
 
Actually in 2009, Century Mining reported that from the Carolin Zone alone, an estimated 5.0 to 5.6 million tonnes grading between 4.2 to 4.8 gpt exists In this resource there are 0.9 to 1.1 million tonnes grading between 8.0 and 9.0 g/t gold. And keep in mind there are underground adits already in place providing access to these resources!
 
But the point I would really like to make is that we can already see nearly 1 million ounces in and around the Carolin Mine, although there are parallel zones, as shown on the prior page, where not enough drilling has been undertaken to outline a resource. Most exciting and potentially a source of early cash flow, is the newly discovered high-grade surface material at the McMaster Zone, which is why that will likely be a high exploration target, along with infill drilling, to bring the Carolin Mine’s 728,000 ounces to 43-101 compliance. But also the potential exists to drift some 1.2 kilometers between the existing underground workings from the Carolin Mine eastward toward the McMaster Zone. In my view there is the potential for a multimillion-ounce deposit laterally in this Priority Target alone, not to mention that these zones are open potentially at considerable depth. Indeed the analog for this deposit is akin to the great Bralorne Mine in B.C. (now owned by Avino Silver & Gold) and the Sutter Mine in California.
 
THE BOTTOM LINE

 
Mining is an exceptionally difficult industry. It takes a long time to make a discovery. A great deal of capital is required to get a mine into production. It can take years on top of that to get permitting and then oftentimes when a mine is already to go and the money is raised, the price of the metal to be mined falls off a cliff and the company that spent millions of dollars goes out of business. But the work exploration and engineering work that was done remains for some lucky mining firm in the future that happens to pick up the property and the benefit of all that prior work at the time of the next up cycle for the metals. I believe that is exactly where New Carolin Gold Corp. finds itself now, except that the markets in general are still chasing the momentum of the general equity market boom that is now getting very long in the tooth. As Michael Oliver and other technical analysts have suggested, the equity markets in general are looking very vulnerable now, while the precious metal markets have been spending considerable time building a base from which to launch the next bull market.
 
Ultimately, the goal of this company’s management team is to outline prospects for a major world-class gold deposit that would be attractive to a major gold mining company. In my view, given its current share price, I like its chances and the risk/reward tradeoff in light of all of what was discussed above. That’s why this seasoned newsletter writer, who saw a company named Carolin Mines sell for $60 a share 30 years ago and thinks the odds are good enough for outlining a major gold deposit now, also thinks that buying this stock at or around its current price of less than US$0.05 is a very worthwhile speculative investment.

...click here for full copy from source